Gil Gutknecht

Mr. GUTKNECHT

Mr. GUTKNECHT. That is correct, and that happens again and again. I am the vice chairman of the Committee on Science, and our research shows Americans represent something like 6 percent of the world's population, but we represent over 50 percent of the basic research done in the world. It is because of Americans that we have places like the Mayo Clinic, and it is because of the American spirit that we do what we do. It is because of the American spirit we put men on the moon and return them safely. We want to do this research. This year we will spend roughly $29 billion taxpayer dollars on research. The interesting thing is many of the pharmaceutical companies work very closely with the various research institutes that do this research, and they pay very close attention. Many times this research that is done, once the research is completed, that information is available free of charge. They get this research free of charge. In many respects, we subsidize the pharmaceutical industry with that $29 billion of taxpayer money. There is a second way that we subsidize the pharmaceutical industry, and that is in the Tax Code. The research they do, they write it off dollar for dollar. Most are in at least a 40 percent tax bracket, so the taxpayers are subsidizing 40-50 percent of the cost of research. And on top of that, many qualify for research and development tax credits. I am not an accountant, but a credit is better than a deduction. On top of that, many of them have moved their facilities to places like Puerto Rico. Puerto Rico is part of the United States, but some people do not know if you are in Puerto Rico you pay no Federal income tax.

Mr. GUTKNECHT. On this particular package, the price here in the United States is $29.95. This is a smaller package. We bought this in Germany for $5.

Mr. GUTKNECHT. I want to thank the gentleman for joining this discussion tonight because, as I say, there are a number of us here in the House who have been willing to speak out, but the gentleman is among the few chairmen of committees who have had the courage to have some hearings, bring in some experts, have people talk about this, what really does happen in Canada. One of the things we have learned, for example, is that over 1 million Americans today are actually buying their prescription drugs from other countries today. The FDA, the Food and Drug Administration, keeps very accurate records. If 1 million people are buying their drugs from other countries, we would think, especially along the Canadian border, but more importantly along the Mexican border, where, again, we have learned from research done by a professor at the University of Texas something like two out of every three Americans who cross the border and go into Mexico bring back with them prescription drugs, which they buy there for a fraction of the price that they can buy them in the United States for. They bring back drugs. More importantly, they do not just bring back a few drugs. Usually when they go across the border they take a list with them. They come from a senior center, they come from a retirement center, they come from a condominium project where most of the people are seniors, and they take a list with them when they go into Mexico, and they bring back thousands of dollars worth of prescriptions. Now, with all those people buying drugs illegally, according to the FDA, you would think, if this is so dangerous, you would think that all of these seniors would be dropping like cord wood in Minnesota, and in Texas, and in California, and the other States where this is very common. But the fact of the matter is we know exactly how many people have died from taking prescription drugs which they bought from other countries. The FDA keeps perfect records. And according to the FDA, it is an easy number to remember. It is a nice round number. It is zero. It is called the Food and Drug Administration. They are also responsible for protecting us from all of the imports of food that comes into the United States. Every day we import millions of tons of food. I think last year we imported into the United States something like 317,000 tons of plantains. Now, I had to double-check to see what is a plantain. But we import tons and tons of food every day. And you know what the FDA says about all that imported food?

Mr. GUTKNECHT. I think the time has come. Again, as Ronald Reagan said, quoting John Adams, facts are stubborn things. All we really want is the facts. I am not getting into motives. I do not care. I do not care why they do things. To me, that is not my job. My job is to stand up and speak for those people who cannot speak for themselves. When I read that statistic that 29 percent of prescriptions written to senior citizens go unfilled, and I have stood in pharmacies and I have watched them with their little slips and seen the look on their faces. It seems to me that we have an obligation to say on behalf of them that we are not going to just sit here and allow this to go on. This has gone on too long. The worst thing is it is getting worse and worse and worse per year. The difference between what we pay and what the European pays is not getting better; it is getting worse. Shame on us. Shame on the FDA.

Mr. GUTKNECHT. I am not going to get into why. All I know is that I took an oath of office. You took an oath of office. We are here to serve the public interest. The pharmaceutical industry does not work for me. I do not work for them. But the boys over at the FDA do work for us, and they are required to serve the public interest. And a drug that a little senior citizen who sits there with a prescription and cannot afford to have it filled, she deserves somebody to speak for her. As long as I am here, as long as I have breath in my lungs, as long as I can hold these charts, I am going to keep talking about this and somebody is going to have to explain why the FDA keeps American consumers from buying safe and effective drugs from other countries for a fraction of the price. I am not going to give up on this. Because, as Winston Churchill said, you know what a fanatic is? A fanatic is a person who cannot change their mind and will not change the subject. I am not going to give up on this and neither are you. We are going to stay on this issue until Americans have access to world-class drugs at world market prices.

Mr. GUTKNECHT. I do not know why.

Mr. GUTKNECHT. Mr. Speaker, I try not to get into that because the presidents of the large pharmaceutical companies do not work for us, but the head of the FDA does. I think the presidents of some of the pharmaceutical companies have to answer to shareholders and the public, and one day they are going to have to answer to God. This book, and there is more research coming out, and the interesting thing is especially after Sarbanes-Oxley, we are going to find out more about how the money actually gets spent. I think we will find more and more of these pharmaceutical companies are spending more on advertising and marketing than they are on research and development. One of the things talked about in this book, there was a study done by the Boston Globe, and they took a close look at the 35 most important and top-selling drugs that the FDA approved over the previous 5 years. All but two of them had been brought through the R&D pipeline with the help of the NIH or the FDA.

Mr. GUTKNECHT. I think that about says it all. As a matter of fact, let me just close with this. The Congress has spoken. When we voted on this matter in the House the last time, 323 of our colleagues voted with us on this.

Mr. GUTKNECHT. Well, the only argument they use is safety. MR. BURTON of Indiana. But that does not hold water.

Mr. GUTKNECHT. But that is the slender reed upon which our own FDA has constructed this wall around the United States; and that is the reason, my colleagues, that American consumers pay $360 and Germans pay $60.

Mr. GUTKNECHT. From legal FDA approved drugs; that is right.

Mr. GUTKNECHT. They ship them the way they ship almost everything else. So the idea that somehow it is easier for somebody to contaminate a drug going via UPS in a sealed package with a bar coded technology using counterfeit-proof packaging, that it is easier somehow to adulterate that drug than it would be to get onto a dock in New Jersey where it is sitting in an evergreen container.

Mr. GUTKNECHT. Exactly. I am not going to argue about the special benefits, but the bottom line is we subsidize the development of new drugs through the NIH, through the National Science Foundation, through the Department of Defense. They do a lot of research which ultimately leads to these miracle drugs. Finally, we subsidize them in the prices we pay. Now, my bottom line is I think Americans ought to pay. I think it is part of the American spirit. We believe in finding the new cures. It is something that makes us Americans. I think we ought to pay our fair share. I think it is the right thing to do; and, frankly, I think we ought to subsidize people in developing countries. I think we ought to pay more than the people in sub-Saharan Africa. I think we ought to pay more than the people in Bangladesh. I think we ought to pay more than some of the people around the world. But I think it is ridiculous that our own FDA makes Americans subsidize the starving Swiss. I think it is time for the Swiss, the Germans, the French, the Japanese, I think it is time for them to pay their fair share. I also think it is time for a much clearer account from the pharmaceutical industry of how much exactly do you spend developing a new drug? How much does it cost to get FDA approval? How much profit do you really make? There is a report, and I cannot confirm this, but the president and CEO of one of the pharmaceutical industries got $227 million in stock options. That was above and beyond his salary. Most of us could live fairly comfortably on a salary of $6-10 million, which is what the average CEO of the nine largest pharmaceutical companies make.

Mr. GUTKNECHT. It is $630 billion over the next 10 years. If we do not do this, and I know people are coming up with discount cards and all of the rest. They say we can get a 20 percent or 30 percent discount. A 30 percent discount off of $360 is not enough to make this program work. Ultimately, you have to have access to markets. I am not in favor of price controls, and I do not like what a few of the countries do in terms of price controls. I want open markets because I know what markets do; markets level. Ultimately, we will pay less; the Germans will pay more. That is how this will work long term, and that is fair, that is reasonable, and it is time we do it. The second thing, to get to your point, I think we ought to sic the General Accounting Office after these guys and get answers to these questions. Because these are legitimate questions that our constituents, the American citizens who send us here to Washington, have a right to know. Somebody ought to get inside those books and find out if it is true. For example, one of the arguments that the pharmaceutical industry makes is that it costs $800 million to develop a new drug, but they never back it up. They never open their books so we can see that, yes, it really is $800 million. The truth of the matter is more and more of us are becoming very skeptical about how much it actually costs to bring a new drug to market and how much they really spend on research and development. In fact, this author believes they actually spend less on research than they do earn in profits. So maybe what we ought to do is ask the General Accounting Office to do some research for us, to get some of the facts and report back to the Congress. I am not sure what we should do about it because I believe in free enterprise, and if company XYZ wants to pay their chief executive $227 million, I am not sure we should do anything about it. But I will tell you what we ought to do. We ought to make sure that everybody knows it. Because I think the pressure from the public is going to start to say, this is lunacy and we should not have to pay it.

Mr. GUTKNECHT. Mr. Speaker, I think there are two things that we ought to do. First of all, we ought to pass strong legislation that says very clearly as it relates to countries, and I have them listed in the bill that we are working on, countries like Canada, the European Union, Japan, Israel, and a few other industrialized countries where we know they have very effective equivalents of our FDA, there is no reason in the world that Americans and their pharmacists should not have the right to import drugs from those countries. It ought to be part of any prescription drug benefit package, and the truth of the matter is, and I did not get to this, how big this problem is. The estimates by our own Congressional Budget Office say that seniors will spend, and these are 65 and over, will spend $1.8 trillion, and that is a huge number, on prescription drugs over the next 10 years. Our estimates, and I think this is the most conservative of conservative, if we simply implemented and forced the FDA to do what they ought to do and what we do with virtually every other product, we could save at least 35 percent. That is minimum. In fact, the number may be more like 55 or 65 percent.

Mr. GUTKNECHT. I think the people who developed this drug, Glucophage, are entitled to be rewarded for it. I believe in that. I believe in intellectual property rights. But I also say why is it we pay so much when the Germans can buy it so cheaply?

Mr. GUTKNECHT. We are much more likely to die from eating imported strawberries.

Mr. GUTKNECHT. Right.

Mr. GUTKNECHT. Twenty-nine percent. I do not know if the gentleman has ever experienced this, but I met this morning with community pharmacists, and I asked them this question: How many of you have had the example where a senior citizen comes in to buy a drug that they need and they hand you the prescription, you tell them how much it is, and they get a real sad look on their face?

Mr. GUTKNECHT. Not much. They wave as it goes by. But they do keep records as well; and according to the FDA, eating imported strawberries, something like 25,000 Americans have gotten ill and some have died from eating imported strawberries. Yet we eat strawberries every day, many of them are imported; and the FDA does almost nothing. But one area where we can absolutely guarantee safety, the FDA has put a wall between American consumers and being able to afford these drugs. Let me give an example. I am holding in my hand a package of Tamoxifen, and this is probably one of the examples that makes me angrier than any other. Tamoxifen is an amazing drug. It is a miracle drug, and particularly for women who are suffering from breast cancer. This may save their lives. This is an amazing drug. The most amazing thing is we helped pay for it. We, the taxpayers. This drug was developed almost exclusively with research and development dollars from the NIH. The company decided originally, because it was developed with taxpayers' money, that they would not patent it. Then they thought about it again and said, no, I think we will patent it. And I guess they had a right to patent it. But this is what really bothers me. We bought this drug in Munich, Germany 3 weeks ago for 60.33 Euros. Now, on that day the equivalent, and the dollar and the Euro vary a bit, but that worked out on that day to $59.05 American for this package of 100 tablets, 20 milligrams, Tamoxifen. This same drug, we called a pharmacy here in Washington, D.C. and asked how much is 100 tablets, 20 milligrams, Tamoxifen. The answer: $360. Sixty dollars in Munich, Germany; $360 in America.

Mr. GUTKNECHT. If this is safe enough for the U.S. Treasury, this is the same company that has developed these technologies to make counterfeit-proof packaging. I will be introducing a bill sometime in the next week; and I am trying to get, I hope, hundreds of my colleagues to vote for it. In fact, the last time we had a vote on this issue of opening up markets, we got 323 votes here in the House. The House has spoken fairly clearly that we want Americans to have access to world-class drugs at world market prices. But if this technology is good enough for the U.S. Treasury, if they can produce technology to make counterfeit-proof packaging for the entertainment industry, for the video game industry, they certainly can and they are making packaging for the pharmaceutical industry. As a matter of fact, I think there are four or five of the companies that are already using this technology. It goes even further. Last week, I was at a demonstration, and this is a little vial, and I do not expect anybody to see this, because I can barely see it looking at it here. But inside this vial there are 150 tiny, tiny, almost nanocomputer chips. The interesting thing is this is the next UPC code. They can literally now embed these chips in packaging, and these chips are bringing the cost down to probably less than a nickel apiece. And when you are talking about a prescription drug package that sells for $125, that is not much to make certain that this is in fact whatever the drug is and it was made at such a plant on such-and-such a day and has gone through the channels. As a matter of fact, when people buy things and they have them shipped by UPS or FedEx or even the parcel post system, literally they put a bar code on that package. And literally you can go to UPS or any of the other package-handling companies, and now you can find out where that package is at any point in the delivery system. Now, as opposed to that, how do you think the pharmaceutical companies ship their drugs? Armored cars?

Mr. GUTKNECHT. Six times. I do not care what kind of a discount card you have, the differences are still too huge. We have an obligation to our taxpayers to make certain that if we are going to have a prescription drug benefit for people who need that benefit, we have to make certain, as the gentleman says, that we get a fair price. But, frankly, as long as we are at it, why should we not get a fair price for all Americans? Why should we not just open up the market as we do for oranges or pork bellies? In fact, I have told this story. People ask how did I get involved in this. The answer is kind of ironic. It was the price of hogs. People say, the price of hogs has something to do with the price of drugs? Let me explain. A number of years ago I had a meeting with some senior citizens groups in my district. They talked about their trips to Winnipeg to buy their drugs. I said, Fine. If you want to go to Winnipeg to buy your drugs, that's fine with me. That was it. I did not think much more about it. Then a few months later, the price of hogs in the United States dropped from about $50 or 50 cents a pound down to $9 or 9 cents a pound. All of a sudden our hog producers in my area were just going crazy. They could not afford to feed the pigs. They could not afford to slaughter the pigs. They were going bankrupt very fast. They were calling me saying, You've got to do something about it. I said, I'm not sure what we can do. They said, at least slow down the supply of Canadian hogs coming across the border to our plants in places like Austin, Minnesota, that are making our supply/demand situation even worse. So I called the Department of Commerce. I called the USDA. I got the same answer. It is called NAFTA. It is called free trade. All of a sudden a light bulb went on in my head. I said, wait a second. You mean we have free trade when it comes to pork bellies, but we don't have free trade when it comes to Prilosec? This is nuts. One area where American consumers could save billions and billions and billions of dollars and yet our own FDA puts up a barrier and says, You cannot do that.

Mr. GUTKNECHT. Six times the amount. And here is the real tragedy. There are American women who need this drug and they cannot afford it.

Mr. GUTKNECHT. The interesting thing is the FDA does not keep those records. They are only concerned about drugs being safe and effective. But Dr. Steve Schondelmeier, one of the top pharmacologists in the world, certainly in America, he has a great quote. He said: ``A drug that you cannot afford is neither safe nor effective.'' I want to come back to something, because it fits with this point. There is a new book out called ``The Big Fix,'' written by Katherine Greider; and she has done an amazing amount of research on this. One of the saddest statistics in this book is that she said that 29 percent, 29 percent of the prescriptions written to senior citizens in America today go unfilled.

Mr. GUTKNECHT. We have the law.